20 January 2011 23:50 [Source: ICIS news]
HOUSTON (ICIS)--Canadian methanol producer Methanex will continue to increase gas exploration in Chile over the next three years because of the ongoing fuel shortage there, the chief executive said on Thursday.
Bruce Aitken, Methanex chief executive, said the southernmost Magallanes region where the company has four methanol plants - but only one running - has been torn apart by violent protests in recent weeks - "absolute chaos and pandemonium" resulting from a natural gas crisis.
Methanex's gas supply for its plant in Punta Arenas became a point of contention in the midst of violent protests over a proposed rate hike by government-run energy company - Empresa Nacional del Petroleo, known as Enap.
Unionised workers at Enap threatened to cut off Methanex's natural gas supply unless the government backed off from its proposed 16.8% rate hike, according to media reports.
Earlier this week, Enap retreated and rolled back its increase to only 3%, roughly equal to inflation, according to the El Mercurio daily newspaper.
Earlier this month a Methanex spokesman said Enap supplied 30% of the company's gas and that the other 70% came from Methanex's own exploration sources.
Aitken said late last year that he was disappointed with only one plant running in Chile, which was because of problems in obtaining a steady natural gas supply for the plant.
Methanex's top executive in Chile, Paul Schiodtz, told El Mercurio this week that there was enough gas in Magellanes to supply all of the region's needs, as long as Methanex could continue investing in exploration.
By the end of 2011, Methanex will have invested $200m (€148m) in gas exploration since 2007, Schiodtz told the newspaper.
Aitken, speaking at an investor conference in British Columbia on Thursday, said he was confident the investment would pay off by enabling the company to restart its three other methanol plants in Punta Arenas.
But Aitken said it would be at least a year before those restarts would be considered, and until then the company would have to keep investing in gas exploration.
"We don't want to turn our company into an E&P company," Aitken said.
($1 = €0.74)
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